Author: Angus Deaton
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 38
Book Description
Saving and Liquidity Constraints
Author: Angus Deaton
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 38
Book Description
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 38
Book Description
Saving and Liquidity Constraints
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Saving, growth and liquidity constraints
Author: Tullio Jappelli
Publisher:
ISBN:
Category :
Languages : es
Pages : 38
Book Description
Publisher:
ISBN:
Category :
Languages : es
Pages : 38
Book Description
Liquidity Constraints and Precautionary Saving
Author: Chris Carroll
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 40
Book Description
Economists working with numerical solutions to the optimal consumption/saving problem under uncertainty have long known that there are quantitatively important interactions between liquidity constraints and precautionary saving behavior. This paper provides the analytical basis for those interactions. First, we explain why the introduction of a liquidity constraint increases the precautionary saving motive around levels of wealth where the constraint becomes binding. Second, we provide a rigorous basis for the oft-noted similarity between the effects of introducing uncertainty and introducing constraints, by showing that in both cases the effects spring from the concavity in the consumption function which either uncertainty or constraints can induce. We further show that consumption function concavity, once created, propagates back to consumption functions in prior periods. Finally, our most surprising result is that the introduction of additional constraints beyond the first one, or the introduction of additional risks beyond a first risk, can actually reduce the precautionary saving motive, because the new constraint or risk can hide' the effects of the preexisting constraints or risks
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 40
Book Description
Economists working with numerical solutions to the optimal consumption/saving problem under uncertainty have long known that there are quantitatively important interactions between liquidity constraints and precautionary saving behavior. This paper provides the analytical basis for those interactions. First, we explain why the introduction of a liquidity constraint increases the precautionary saving motive around levels of wealth where the constraint becomes binding. Second, we provide a rigorous basis for the oft-noted similarity between the effects of introducing uncertainty and introducing constraints, by showing that in both cases the effects spring from the concavity in the consumption function which either uncertainty or constraints can induce. We further show that consumption function concavity, once created, propagates back to consumption functions in prior periods. Finally, our most surprising result is that the introduction of additional constraints beyond the first one, or the introduction of additional risks beyond a first risk, can actually reduce the precautionary saving motive, because the new constraint or risk can hide' the effects of the preexisting constraints or risks
Saving and Liquidity Constraints Using SIPP Panel Data
Author: Matthew Giovanni Mercurio
Publisher:
ISBN:
Category :
Languages : en
Pages : 276
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 276
Book Description
Income Uncertainty, Liquidity Constraints, and the Option Value of Saving
Author: Cristiń Echeverría
Publisher:
ISBN:
Category :
Languages : en
Pages : 202
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 202
Book Description
When Expectations Become Aspirations
Author: Berber Kramer
Publisher:
ISBN:
Category :
Languages : en
Pages : 49
Book Description
A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and intertemporal choice predict that reference dependence reduces savings but these models abstract from liquidity constraints. Introducing a liquidity constraint, I find that reference dependence can increase optimal savings for people without access to credit. Ex-post, after reference points have been formed, liquidity constraints force consumers to take part of an income loss in early periods, inducing those who are reference dependent to concentrate the full loss in early periods and save in order to eliminate future losses. Further, anticipating a liquidity constraint raises the expected level of future consumption and thus the expectations-based reference point for future periods, creating an ex-ante savings motive. These findings underscore that it is important to account for financial market imperfections when applying or testing reference-dependent models in low-income settings, and potentially explain heterogeneity in how much the poor save when facing binding liquidity constraints.
Publisher:
ISBN:
Category :
Languages : en
Pages : 49
Book Description
A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and intertemporal choice predict that reference dependence reduces savings but these models abstract from liquidity constraints. Introducing a liquidity constraint, I find that reference dependence can increase optimal savings for people without access to credit. Ex-post, after reference points have been formed, liquidity constraints force consumers to take part of an income loss in early periods, inducing those who are reference dependent to concentrate the full loss in early periods and save in order to eliminate future losses. Further, anticipating a liquidity constraint raises the expected level of future consumption and thus the expectations-based reference point for future periods, creating an ex-ante savings motive. These findings underscore that it is important to account for financial market imperfections when applying or testing reference-dependent models in low-income settings, and potentially explain heterogeneity in how much the poor save when facing binding liquidity constraints.
A Study of Liquidity Constraints and Precaustionary Savings
Author: Seung Myung Lee
Publisher:
ISBN:
Category :
Languages : en
Pages : 158
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 158
Book Description
Soft Liquidity Constraints and Precautionary Saving
Author: Emilio Fernandez-Corugedo
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 38
Book Description
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 38
Book Description
Liquidity Constraints and Precautionary Saving
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description